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Quest Means Business

EU Wins Nobel Peace Prize; Nobel Prize Reaction; JPMorgan Chase, Wells Fargo Post Record Q3 Profits; Wall Street Fizzles; European Markets End Week in Red; US Economy; US Reacts to Ryan Workout Photo Shoot; Dollar Falling; Outlook Taiwan: Saving Indigenous Culture

Aired October 12, 2012 - 14:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

MAX FOSTER, HOST: Tonight, prize or prophecy? The EU says the timing's right for their Nobel win.

(BEGIN VIDEO CLIP)

JOSE MANUEL BARROSO, PRESIDENT, EUROPEAN COMMISSION: It's certainly encouragement. It's also responsibility, an increased responsibility.

(END VIDEO CLIP)

FOSTER: The Diamond standard. JPMorgan rebounds from its sharp loss.

And a test of time. Portrait of the high-end market.

I'm Max Foster. This is QUEST MEANS BUSINESS.

Hello to you. An honor and an inspiration. Jose Manuel Barroso says the European Union is a deserving winner of this year's Nobel Peace Prize. Now, the Nobel Committee called it one of the greatest conflict resolution mechanisms ever devised. And as the European Commission president told me earlier, this prize can act as motivation to fix Europe's debt crisis.

(BEGIN VIDEOTAPE)

BARROSO: I think that it's a justified prize because of everything the European Union has been doing for the reconciliation in Europe after the second World War for the reunification of almost all the continent around the values of peace and freedom, the rule of law, justice, and respect of human rights.

And the European Union is today a unique construction of -- cooperation and integration. Also, super-national institutions between the 27 member states. More expect to join. And I think it's also a source of inspiration for many, many people around the world.

FOSTER: As you say, there has been a consideration in previous years for the European Union. Some people are questioning the timing, though. Why this year? Because there is some sense of irony that there are demonstrations on the streets of Athens, you're seeing Nazi signs reemerging as a result of the eurozone crisis.

And just to quote Martin Callanan -- he's leader of the Euroskeptic Conservatives and Reformists Party -- he's saying that the EU's policies have exacerbated the fallout of the financial crisis and led to social unrest that we haven't seen for a generation. So, some question about the timing of the prize award.

BARROSO: The decision of the prize was taken unanimously. I was informed that it was a unanimous decision of the Nobel Peace Prize Committee. So, it's better to ask the Nobel Peace Prize Committee about the reasons.

But if I may say, I think the timing was very appropriate, because it shows that even in times where we are facing very serious challenges, the European Union remains a source of inspiration for many people around the world.

I think the message that the international community through the Nobel Peace Prize sends the European Union is that we have a very precious thing in Europe, his European Project. And that the world needs a strong European Union. So it is certainly not only an honor but also an encouragement for what we are doing to have a stronger European Union that can face its current challenges.

That, we have to say, the problems we have were not created by European Union. The problems that we have were created either by irresponsible behavior in the financial sector or by excessive debt of the governments. The European Union is part of the solution.

Yes, it is a very challenging process, but it was not the European Union that created the problems, as you know. Many countries outside the European Union are also feeling the consequences of some mistakes of the past.

FOSTER: Could this award bring unity to the eurozone and the crisis emerging within it?

BARROSO: I think it's certainly an encouragement. It's also a responsibility, an increased responsibility. I hope that all the leaders of the European Union, the member states, will take this not only as an honor for all of us, the European institutions, the member states, and all the citizens.

But also with this spirit that this gives us more responsibility. We need a strong, effective European Union. We need to respond to the current challenges, specifically in terms of the debt in some of our member states and have a good response to the issues of governance in the euro area.

So, yes, I take this message of the Nobel Peace Prize as not only a recognition for what the European Union has been doing, but an encouragement for what now must be doing for the future.

(END VIDEOTAPE)

FOSTER: The European Commission president speaking to me earlier.

Well, it's certainly not been a peaceful week on the economic front. Our correspondents have been gauging the reaction to this award across the continent.

Matthew Chance is in Athens, where violence greeted the visit of German chancellor Angela Merkel this week. Al Goodman is in Spain, which may be the next country to be bailed out by the EU. But first, we go to Diana Magnay in Berlin, where Angela Merkel today hailed the euro as more than just a currency.

(BEGIN VIDEOTAPE)

DIANA MAGNAY, CNN INTERNATIONAL CORRESPONDENT: German politicians welcomed the decision of the Nobel Prize Committee to award the Peace Prize to the European Union, Angela Merkel, the German chancellor, calling it a wonderful decision.

She said that she had always maintained that the euro was more than just a currency. That it stood for the values upon which the European Union was based. Let's just take a listen to what she said.

ANGELA MERKEL, CHANCELLOR OF GERMANY (through translator): Six decades of peace in Europe is a long time for us who live in the European Union. Yet in history, it's only a blink of an eye. That's why we must never forget that in order to keep this peace, democracy, and freedom, we have to work hard over and over again.

MAGNAY: Helmut Kohl who, alongside Francois Mitterand, really helped form the single currency, said that he was thrilled by this clever and important decision, and that as Europeans, we have reason today to be proud.

Now, Angela Merkel has been vilified, especially by peoples in the south of Europe, for the role that she is taking to try and steer Europe through its sovereign debt crisis. Her call has been for more Europe, for a transfer of sovereignty to Brussels.

The main message, according to the Nobel Committee, of this prize was to look back at the achievements of what Europe has managed to do over the last six decades, and make sure that there cannot be a resurgence to nationalism and extremism.

And that certainly gives politicians in Europe, politicians like Angela Merkel, who've played such an important role in the debt crisis, sort of the strength of their convictions to try and hold their course.

Diana Magnay, CNN, Berlin.

AL GOODMAN, CNN MADRID BUREAU CHIEF: Thanks, Diana. It's a national holiday here in Spain, so there was a more limited reaction, but the Spanish prime minister, Mariano Rajoy, a conservative, and Javier Solana, a socialist and the EU's former point man on foreign policy coincided. They both essentially said a well-deserved peace prize for the EU.

But in the street, where many people are suffering the economic crisis, the reaction was not all positive.

UNIDENTIFIED MALE: Yes, I agree and very surprised because I don't know this prize, but I think it's a very -- a better situation for our country, for the European Union.

UNIDENTIFIED MALE: Here in Spain, we are not very well-informed about what the European Union does about the peace in the world. So, I am not very -- I've been not very aware, why the European Union has been awarded with this award.

UNIDENTIFIED FEMALE: I strongly disagree with it, because there's more social unrest in Europe at this moment, and also discrimination. There is a discrimination, whether you like to admit it or not.

GOODMAN: Let's go to another country suffering deep austerity cuts, Greece, and Matthew Chance in Athens.

MATTHEW CHANCE, CNN SENIOR INTERNATIONAL CORRESPONDENT: Well, reaction among Greeks has been mixed. On the one hand, there are those who see the Peace Prize as a timely reminder to the EU to remember its original purpose and not to turn its back on countries like Greece in this time of crisis.

But of course, there are many Greeks who question the value of the EU, particularly as this country, wracked by unemployment and recession, struggles to stay in the eurozone. For them, the EU is an undeserving winner of this most high accolade.

Matthew Chance, CNN, Athens.

(END VIDEOTAPE)

FOSTER: Well next, defying the downturn. We look at the record profits from two of the biggest banks in the US.

(COMMERCIAL BREAK)

FOSTER: Well, it's a record-breaking day on Wall Street, with two of America's biggest banks saying they brought in more cash than ever before. JPMorgan made a net profit of $5.7 billion in the third quarter. That's a jump of 34 percent from the same period last year. Wells Fargo's third quarter net profit rose 22 percent. It made almost $5 billion in the three months up to October.

CNN's Maggie Lake has been looking at the numbers. And Maggie, how did they do it?

MAGGIE LAKE, CNN INTERNATIONAL CORRESPONDENT: Yes, housing, Max. Housing, housing, housing. Which portends pretty good things for the US economy. You ran through the numbers, record-breaking, very nice across the board.

And Jamie Diamond on the conference call with investors actually sounding pretty upbeat, especially when he was talking about housing, which really helped that bottom line. He's saying that housing has turned the corner. This sort of reinforces that picture of a rebound in that very important sector that we've been hearing about, saying that unequivocally.

Interestingly for your patch, Diamond also saying that he thinks Europe is making progress. I know it didn't seem like that, seeing all those protests that we covered all week in the streets and the difficulties in Greece, but he does feel like it's important what the central bank has been doing.

If there was an area that he was a little concerned about, I think it was the fiscal cliff. He mentioned that fiscal policy in the US here, even more important than what the Fed does when it comes to the economy. Problems there could sort of erase this beneficial QE3 boost to housing that we're seeing that's feeding into their bottom line.

Let's put up Wells Fargo, because it was a very similar story there. Wells Fargo very exposed to the housing market here in the US. In fact, 60 percent of those record profits, the bank's profits, came from their mortgage banking sector, and that was up 53 percent from this time last year. That is a huge jump, Max.

So, when we're talking about the economic recovery here in the US, the fact that housing has come back certainly good news for investors. But it's interesting how this is going to play out.

I mentioned Jamie Diamond sounded upbeat. Upbeat, but they weren't making too much noise about just how well they're doing, especially off of housing, which is what started the whole financial crisis in the first place. So, those record profits headlines for banks maybe not something they want to see splashed all over the front pages.

FOSTER: Maggie, thank you very much, indeed, for that. Incredible figures.

Well, Wall Street's early gains have fizzled out. Right now, the Dow's practically unchanged from Thursday's closing price, up just 0.1 percent. It's heading for a fall of more than 2 percent for the whole week, actually.

Banking shares are some of the worst performers, would you believe? That follows on from a mostly negative session in Europe. Investors sold off their commodities shares. Rio Tinto, Anglo-American, Total, and BP each lost around 1.6 percent. All of these indices fell for the week as a whole.

Robert Shapiro is the former US Undersecretary of Commerce for Economic Affairs and was economic advisor to President Clinton. He joins us now from our Washington Bureau. Thank you so much for joining us.

First of all, those banking figures, they're extraordinary, aren't they? Record figures at a time like this?

ROBERT SHAPIRO, FORMER ECONOMIC ADVISOR TO BILL CLINTON: Well, it's really not that extraordinary. It's what we're seeing is the forces to drive a stronger recovery have fallen in place. Housing is certainly a very critical aspect of it. But in addition, we've had QE3, which increased the liquidity for housing.

Also, when you look at both JPMorgan and Wells Fargo, you also see that the -- there is a give-back from the amount that had been set aside for bad loans. Which is to say, fewer loans that are failing than had been projected. That again is showing some strength in the economy.

FOSTER: Housing important, of course, and it really helps confidence of people, of consumers, doesn't it? But really, what we want in America is better jobs figures. They're starting to come through. It's not clear if that's going to last. How are you looking at the jobs front right now?

SHAPIRO: Well, I'm actually pretty bullish about jobs. I think we are seeing some gathering strength in employment.

What we're seeing in housing is really a response to changes in household balance sheets that occurred -- finally came to pass at the end of last year when the share of family income, debt as a share of family income, and debt service as a share of family income, but returned to normal levels.

This meant that the deleveraging process arising out of the loss of wealth from the financial meltdown in 2008 had been largely completed by households. That had been what was holding back consumer spending.

Well, I think consumers having been very burned and having seen their wealth continue to decline for five years have been sitting back and saying, OK, we're in a better position, now, to begin to consume as well as to buy homes, but let's just see if this lasts.

And I think they've been giving it some time. Now, we see housing prices rising in a majority of places, and I -- so I think we really have the factors for something of a takeoff in consumer spending, which in turn will drive business investment.

FOSTER: And good news, I assume, for President Obama, the incumbent president going for a reelection, and it's all about the economy, as always, as President Clinton, of course, famously pointed out.

The vice presidential debates last night were interesting, weren't they? In the past, perhaps seen as slightly irrelevant, but actually a huge viewership and really resonated. What did you make of that in terms of economics?

SHAPIRO: Well, I thought that the two sides made the best cases they could for their respective positions. Mr. Ryan was something -- at something of a disadvantage because the core of their economic program is these big tax cuts, and they refuse to say how they're going to pay for them. And so, he had to dance around that.

And Vice President Biden, who is -- comes from a working-class family and has always been seen as an advocate of working people, was able to make very effective use of Governor Romney's famous comment about 47 percent of the country not willing to take responsibility for themselves, and Paul Ryan's comment of 30 percent of the country wanting to depend on government.

FOSTER: OK, thank you very much for joining us. Robert Shapiro, thank you for your insight there.

Well, that vice presidential debate last night certainly brought new attention to Joe Biden and Paul Ryan. As Jeanne Moos reports, Ryan is also in the spotlight for a different reason.

(BEGIN VIDEOTAPE)

JEANNE MOOS, CNN CORRESPONDENT (voice-over): Does this picture say "Mr. Vice President" to you?

MOOS (on camera): This is Paul Ryan, the Republican --

UNIDENTIFIED MALE: Oh!

UNIDENTIFIED FEMALE: Is that him? Oh!

UNIDENTIFIED MALE: No, no, no. See, that's worse. That's like, oh no.

MOOS (voice-over): Oh, yes. And the photos of Paul Ryan working out that came out in "Time" magazine have plenty of fans tweeting, too.

"And just like that, panties drop."

"And the internet melts."

UNIDENTIFIED MALE: Looks fine.

UNIDENTIFIED FEMALE: Knees are a little bony.

UNIDENTIFIED MALE: Yes.

MOOS: Noted one poster, "Big Bird called, he wants his legs back."

"Paul Ryan is the bro-est bro ever to run for VP."

"Paul Ryan is definitely channeling his inner Marky Mark."

(MUSIC - "GOOD VIBRATIONS" BY MARKY MARK)

MOOS: Just as Marky Mark pumped iron --

(MUSIC - "GOOD VIBRATIONS" BY MARKY MARK)

MOOS: -- so did Paul Ryan at a photo shoot almost a year ago when the fitness buff congressman was a runner-up for "Time's" Person of the Year.

Some say by releasing the old photos around the time of the vice presidential debate, the editors of "Time" "wish to make him look trivial, young, and unserious."

MOOS (on camera): Maybe it's the backwards baseball cap, but when we took the photos out to the street --

UNIDENTIFIED MALE: I have no clue who that is.

UNIDENTIFIED MALE: Not at all.

UNIDENTIFIED MALE: I have to say no.

MOOS (voice-over): Two thirds of the people we asked didn't recognize him.

MOOS (on camera): Who is this guy?

UNIDENTIFIED MALE: That's Mr. Scheuester, Matthew Morrison?

(BUZZER)

MOOS (voice-over): No. Not the Glee Club instructor from "Glee."

UNIDENTIFIED MALE: A little like Randy Cooper.

(BUZZER)

UNIDENTIFIED FEMALE: Jeff somebody? He's got a new --

UNIDENTIFIED FEMALE: Sitcom?

UNIDENTIFIED FEMALE: Yes, a new talk show.

(BUZZER)

MOOS: No, not Jeff Probst.

UNIDENTIFIED MALE: I think that's the vice president soon-to-be.

(DING)

MOOS: The VP candidate's spokesman said this about the photos: "Paul Ryan takes his health seriously. Clearly, judging by these silly pictures, he doesn't take himself too seriously."

Neither did readers on Buzz Feed. They put him in with the Village People, with the cast of "Jersey Shore." They made him flex and even wink, like a certain previous VP candidate.

Some wondered when are the Joe Biden workout photos coming? Best we could do is drag out that famous Photoshop job done by "The Onion" of shirtless Joe Biden washing his Trans Am in the White House driveway. Shirtless Joe, meet Backwards-Cap Ryan.

MOOS (on camera): This is a potential vice president of the United States.

UNIDENTIFIED FEMALE: Oh! It is!

(DING)

MOOS: Jeanne Moos --

UNIDENTIFIED FEMALE: I think it's a great look for him.

(DING)

MOOS: CNN.

UNIDENTIFIED FEMALE: Just like a regular old Joe Blow.

(DING)

MOOS: New York.

(END VIDEOTAPE)

FOSTER: Make up our own minds about his look. If you missed the live broadcast of the vice presidential candidate debate, you can catch a replay here on CNN in just over 90 minutes from now.

Time now for today's Currency Conundrum. The European Union is this year's Nobel Peace Prize winner, scooping a prize of $1.2 million. Our question to you: how much does that work out per European citizen? Is it half a cent, B quarter of a cent, or C 0.025 of a cent?

The dollar is falling against the European currencies this Friday. Meanwhile, it's holding steady against the Japanese yen.

(COMMERCIAL BREAK)

FOSTER: This week, we've been shining a spotlight on Taiwan, with a close-up look at the island's business, industry, and consumer trends that fuel its economy. We focused on the driving forces behind its economic growth, and we've looked at the concerns over Taiwan's long working hours and steps being taken to bring them under control.

We've also examined Taiwan's growing airline industry, from Hello Kitty-themed flights to cut-rate fares, airlines are pulling out all the stops to attract passengers. Taiwan is also -- or has also been making strides in the business of bicycles and is now a global center for high-end bikes.

But Taiwan's quest for modernity has also caused problems for traditional ways of life. The island's indigenous people say their culture is struggling to survive, despite subsidies from the government. Paula Hancocks has the details.

(BEGIN VIDEOTAPE)

(WOMAN SINGING IN ATAYAL TRIBAL LANGUAGE)

PAULA HANCOCKS, CNN INTERNATIONAL CORRESPONDENT: The oldest woman in Kaiyou (ph) Village sings to one of the youngest, teaching her the songs of Taiwan's Atayal tribe. Laua Oyu is 88 years old. She dresses in traditional clothes and speaks the Atayal language, hoping to preserve the culture of her indigenous tribe.

"The traditions of our village and society, and the spirit of our ancestors are not passing to the next generation," she tells me. "Our young people are facing a dilemma between adapting to modern society and retaining traditional values. I'm really worried."

And so is the government. These tourists are learning how to make rice the traditional way, part of a government-subsidized project to bring visitors and money to the area.

For just $20, tourists can sing like the Atayal, dress up like them, and help to keep the identity alive. "It's important to learn how the indigenous people lived," says this tourist, "and how they've struggled to keep their culture."

For much of the 20th century, many tribes suffered at the hands of colonizing powers, with some traditions and languages banned. It was only in 1996 that the government started taking indigenous affairs seriously.

HANCOCKS (on camera): The Atayal tribe is one of only 14 that's currently recognized by the Taiwanese government. There are a few more that are currently lobbying to be acknowledged, because with that recognition comes government subsidy and a far better chance of being able to preserve the language and the culture.

HANCOCKS (voice-over): Biling Yugan only learned to weave at the age of 45. She says her ancestors would have learned by the age of 10. She does regret not being taught by her mother, but tolerance towards indigenous tribes when she was growing up was low.

She's now passing on her skill to tourists. "The government subsidies are not enough," she tells me. "It's not enough to make a living, but we have to keep our traditions going."

As long as they can keep the tourists coming and spending, these tribes hope there is a greater likelihood of self-preservation.

Paula Hancocks, CNN, Wulai, Taiwan.

(END VIDEOTAPE)

FOSTER: Well, for more information on Taiwan and our special coverage from this week, do go to cnn.com/outlook.

Next, it's time to bend the arc of history. The World Bank president outlines his ambitious agenda in an interview with CNN.

(COMMERCIAL BREAK)

MAX FOSTER, CNN HOST: Welcome back. I'm Max Foster in London. These are the news headlines this hour.

The BBC has announced two internal inquiries into abuse claims made against one of its former presenters.

(BEGIN VIDEO CLIP)

FOSTER (voice-over): Jimmy Savile, who died last year, has been accused of sexually abusing dozens of women and young girls. Some of the attacks supposedly took place on BBC premises. The corporation's director general, George Entwistle, says he's sorry for what's happened.

GEORGE ENTWISTLE, DIRECTOR GENERAL, BBC: I have one thing to repeat: that is a profound and heartfelt apology on behalf of the BBC to every victim.

FOSTER (voice-over): The Norwegian Nobel committee has awarded the Nobel peace prize to the European Union for bringing peace and reconciliation to the continent after World War II. German Chancellor Angela Merkel says Europeans can't forget; they must always strain and strive for this peace for democracy, for freedom.

Political discontent is bringing protesters out to Egypt's iconic Tahrir Square again. Supporters and opponents of Egyptian President Mohammed Morsi clashed in the square, throwing stones at one another. The health ministry says at least 12 people were wounded.

And schoolchildren are holding a candlelit vigil for the young activist who survived an assassination attempt by the Taliban. Teenager Malala Yousafzai is currently in hospital in critical condition at a hospital in Rawalpindi. She was shot and wounded by Taliban gunmen on Tuesday.

(END VIDEO CLIP)

(MUSIC PLAYING)

FOSTER: The IMF and World Bank are holding their annual meetings in Tokyo, and World Bank chief, Jim Yong Kim, is calling for a faster end to extreme poverty. He says the Eurozone debt crisis is threatening growth and jobs in developing countries and that the World Bank must work harder to find solutions to these global challenges. He spoke to CNN's Andrew Stevens.

(BEGIN VIDEO CLIP)

JIM YONG KIM, PRESIDENT, WORLD BANK: Here are the things that they're most passionate about. One: ending poverty. You know, person after person tells me we came here to fight poverty and we want that to be front and center.

Second: boost prosperity. I mean, this is -- what we've shown in our latest world development report, 2013, is jobs are critical; jobs are required. And in order to help countries to create the jobs, you need growth in the private sector. So end poverty is critical, but the way we're going to do is help countries boost prosperity, boost growth in the private sector and provide jobs for people.

And the third is that it's clear that there are many global issues that the bank can have a big impact on. One of the issues that I'm especially passionate about is climate change. You know, I've had training in science. And the data on climate change are far more frightening than most people understand.

ANDREW STEVENS, CNN CONTRIBUTOR: Do you think talking about changing the arc of history, alleviating poverty more rapidly than is commonly perceived, is possible? That's a very big statement. It's generated a lot of enthusiasm within the bank. But what makes you think you can go against what is obviously perceived wisdom?

KIM: Well, the question that we're asking is, in fact, a very straightforward question. And I've asked it to our scholars of poverty -- and we have the best scholars on poverty in the world, people like Martin Ravallion and others, and they -- what they've told me is, you know, it's going down at about 1 percent a year.

But if we really pushed, if we really helped developing countries boost their prosperity, in other words, grow their economies more quickly, if we were really able to make sure that public expenditures were really focused on poverty alleviation, it's possible for us to actually make that curve bend.

STEVENS: How much?

KIM: We're not trying to set a target for the world. I'm asking a very specific question as a leader and a manager, and the question I'm asking is, if we intend to bend the arc of history, if we intend to make a transformational impact, what would we have to do differently as an organization? Are we optimally organized right now as a World Bank to bend the arc of history?

And I think that's what's causing the excitement, because people are saying, well, actually, no; because there are too many bureaucratic procedures. And everybody in the bank complains about bureaucratic procedure.

It's not like people are saying we like the bureaucratic procedures. We want to get rid of them, so that instead of focusing time on preparing paperwork, we can focus on bending the arc of history.

STEVENS: Cut the red tape.

(END VIDEO CLIP)

FOSTER: Head of the World Bank speaking to Andrew earlier.

Now still ahead on QUEST MEANS BUSINESS, is art still a picture perfect investment? We'll head to a fine art fair in London to find out.

(MUSIC PLAYING)

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIP)

(MUSIC PLAYING)

FOSTER (voice-over): Time for the answer to today's "Currency Conundrum," earlier we asked you how much each European system would get from the E.U.'s Nobel peace prize, when the answer is C, 0.025 of a cent. Here's what it actually looks like. So you lucky Europeans invest the winnings wisely and don't spend it all at once. (Inaudible).

(END VIDEO CLIP)

FOSTER: Now if you're in the market for fine art, maybe you'd fancy something like this. Well, Pablo Picasso's "Still Life with Tulips" could fetch as much as $50 million when it comes under the hammer at Sotheby's next month. Well, that's far out of reach for most of us. Art as an investment has held up well, pretty much over time. Art has competed with and even beaten stock market returns.

But given the current economic picture, should a portrait be in your investment portfolio? Well, Isa Soares has been to our London art fair to find out.

(BEGIN VIDEO CLIP)

ISA SOARES, CNN CORRESPONDENT (voice-over): "Chairman Mao with Windscreen Wipers," 13th century gargoyles, retro television, and of course, a grand master, a Picasso. For the first time in its 10-year history, London's Frieze Art Fairs (inaudible) contemporary with the ancient, the cutting edge with the historical.

AMANDA SHARP, COFOUNDER, FRIEZE ART FAIR: When we launched the fair in London, a lot of galleries came to us and showed historical material and she said, well, we love your fair but actually it doesn't really cover the things we're interested in. We thought, OK. So maybe galleries, collectors, maybe there's an opportunity here.

SOARES (voice-over): Plenty of opportunity, too, for more than 170 exhibitors, showcasing and selling their works of art. For them, this is a cultural platform. More importantly, an economic opportunity.

SHARP: What's extraordinary, I think, to most people outside of the art world is that the market is still going strong. The galleries haven't been closing, that the fairs are doing well. The people are still buying art.

SOARES (voice-over): And art is not in short supply here. According to reports, a record $1.5 billion worth of art is being exhibited at this fair. Not a problem, because pockets here run deep and the buyers are often on the move. Within just 10 minutes of the fair opening, this Paul McCartney sculpture was reportedly sold for over $1 million.

And this Picasso, initially priced at $8.5 million, was among the early sales.

(Inaudible) painting that reportedly cost $800,000, even we were too late to see it.

Amanda Sharp says those investing in art are mostly from emerging economies, south Asia and eastern Europe.

SHARP: If you buy an artwork as an investment, it's an investment of love. So you can always live with it if you love it, whether the price and value change, becomes, to some degree, irrelevant.

SOARES: Even beyond this fair, art buyers are throwing millions of dollars at works of art, just down the road from here on Bunch (ph) Street, an art dealer is selling over $100 million worth of German and Austrian art on that same road, Sotheby's is auctioning a single painting worth up to $19 million.

With numbers like these, it's no surprise the art market may be one of the very few looking truly picture perfect -- Isa Soares, CNN, London.

(END VIDEO CLIP)

FOSTER: And Frieze London is in Regents Park until Sunday if you want to pop along and spend for the money.

Jenny Harrison is an art lover, lots of money; she'll be popping over, I'm sure.

JENNY HARRISON, CNN METEOROLOGIST: I was just thinking Frieze London, what a good name, if you just change the letters a bit. Now I know.

FOSTER: Ah. I missed that one. I could have segued beautifully (inaudible).

HARRISON: Oh, you did. It's Friday, (inaudible) obviously you need a good weekend. But, yes, because you know what, temperatures are getting quite low in London for the next couple of nights, not quite freezing, but not far off. It has to be said the skies are clearing so you should be seeing some pretty good sunshine as well.

But generally, across pretty much all of Europe, it's a very unsettled weather pattern. You can't even say there's a north and south divide. It is a bit milder in the south. But even so, some rain, some heavier spells of rain at times.

And in fact, there are still warnings in place across parts of Scotland for the very heavy amounts of rain for flooding. You can see in the last few hours some very bright red and yellow areas indicating those really heavy downpours.

But the rain is continuing its way across (inaudible) Low Countries. Germany, you've been seeing some very heavy amounts of rain there across the south. And as I say, it's just a very unsettled picture throughout the weekend.

We've got two main areas of low pressure with their fronts, of course, sliding through. So this is where the heavy rain will be across the weekend, there across the Low Countries, again, into Germany and also across the south, through the central Mediterranean. So that's where we've got a few warnings in place.

We have had a few warnings into northern France. You could get some strong winds coming in and maybe some large, damaging hail, and certainly the same across the central Med. But it's fairly widespread, as you can see, even pushing down into northern areas of northern Africa.

But this is the wind forecast for the next 48 hours, winds pretty strong initially through the North Sea, the Baltic Sea as well, but then look at this. This goes are we going to see those winds really picking up and certainly through the English Channel, hence those warnings across the north coast of Spain. Spain? France.

There is that cold air. That blue indicating temperatures actually a bit below average, and that cold air is going to get funneled down even as far as northern sections of the U.K. When it comes to delays on Saturday at the major airports, some fairly low cloud is probably going to be the main problem.

You can see (inaudible) for example in the afternoon, 45 minutes, the delays likely to be there and those delays continuing on into western Europe, too. More in the way of snow across the north, more rain across the south, 23 in Rome but very unsettled and 12 Celsius in London. But you should see some sunshine, Max.

FOSTER: OK, Jenny, thank you very much indeed.

And if you're wondering where Richard is, the answer is on the mother of all road trips, as he describes, or more accurately, a rail t

rip. He is taking a tour around the United States, getting the lie of land ahead of November's election. I should say he began in Chicago. Here he is at the city's Union Station and you can read his thoughts on Chicago and find out where he's headed next, CNN.com/international. Stay tuned next week for all those updates.

That is QUEST MEANS BUSINESS. Thank you for watching. I'm Max Foster in London. MARKETPLACE AFRICA continues here on CNN.

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ROBYN CURNOW, CNN HOST: You're watching MARKETPLACE AFRICA. I'm Robyn Curnow in Johannesburg. Now a wave of strikes continues to grip South Africa's mining industry as well as (inaudible), of course, triggered by that violent strike in August at a Lonmin-owned mine, which saw more than 40 people killed.

Now this wave of labor unrest, what does this mean? Well, already, South Africa has suffered a ratings downgrade, the first since the end of apartheid. And the rand, South Africa's currency, is at a three-year low against the U.S. dollar as international investors lose confidence. Well, here's Nkepile Mabuse with more.

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NKEPILE MABUSE, CNN CORRESPONDENT (voice-over): Since this tragic day in August, South Africa has been war with itself. Police shot dead more than 30 protecting mine workers, who staged a wildcat strike, demanding increased pay.

Labor unrest has since spread. And the bodies keep piling up. According to police, nearly 50 (ph) people have been killed in strike- related violence in the country's Platinum Belt about 100 kilometers outside the capital of Pretoria.

UNIDENTIFIED MALE: (Speaking foreign language).

MABUSE (voice-over): What began as a pay dispute at London (inaudible) Lonmin Mine quickly spiraled out of control, permeating other sectors of the economy even after the Lonmin miners returned to their jobs. More recently, truck drivers have been torching vehicles and attacking non- striking workers. Their work stoppage has caused fuel shortages as far away as Zimbabwe.

The wave of unrest may have long-term implications for South Africa, even though the government is playing them down.

UNIDENTIFIED MALE: To suggest that this is a passing phase is to give false hope. And I think that's -- even though we may not be at the level of Tunisia or Egypt, the rest of the Arab world (inaudible) so-called Arab Spring, I think you have the elements of it.

MABUSE (voice-over): Growing inequality has been the source of discontent in South Africa for some years now. Leaders in business, government and labor unions are seen by many here as living off the fat of the land while ordinary people struggle to survive.

Recent reports that the president is using more than $20 million in public funds to renovate his private home have provided more fuel for criticism. The government says the improvements are for security.

Worker discontent erupted in January at Impala, where the world's second largest platinum producing mine was crippled by a wildcat strike. The miner unrest spread to neighboring London. By September, operations at some of the world's top gold and platinum producers had ground to a halt. Workers in the diamond, chrome, iron ore and motor industry also put down their tools.

Today, the scenes that played out at Lonmin have been repeated at the world's fourth largest gold producer, Goldfields.

NICK HOLLAND, GOLDFIELDS CEO: Is this thing really about wages?

MABUSE (voice-over): The company's CEO says Lonmin set a dangerous precedent, ending its strike by giving its employees pay hikes of up to 22 percent.

HOLLAND: So all they've done is they've just bought themselves a little bit of breathing space for a short period of time. They're going to have restructure. They simply can't afford it.

So that's the other side of the coin that I mentioned. You can pay today and then take jobs away tomorrow.

UNIDENTIFIED MALE: (Speaking foreign language).

MABUSE (voice-over): Rock drill operator Afhelis Leroke (ph) says the miners' revolt has been in the making for years.

"Our fathers have been working in these mines since the 1970s," he tells me. "We found them here, earning very little. Now we, too, are paid a pittance. Every single day, I go deep down into the belly of the Earth," he adds. "I deserve to be paid more for my efforts."

According to Goldfields, rock drill operates earn a basic monthly salary of 5,800 Rand, which is about $650. With benefits and bonuses, the total package can amount to $1,300, close to a high school teacher's salary.

Holland says the workers' pay hike demands are unreasonable.

HOLLAND: We're seeing a lot of investors who've been with us for 15 years who are saying, "We're out of here."

MABUSE: Right now, because of what's happening in the country at the moment?

HOLLAND: Exactly. All of these issues we're faced with today, they're saying the risk here is just too high and we're going to go and take our money out. And we're going to put it somewhere else.

MABUSE (voice-over): International institutions began sounding alarm bells even before the labor unrest. In its most recent Global Competitiveness Report, the World Economic Forum rated South Africa's labor-employer relations the worst among 144 countries.

Moody's Investor Services recently downgraded South Africa's credit rating. Analysts warn of tougher times ahead.

UNIDENTIFIED MALE: We are unlikely to see the economy growing, at least (inaudible) in the next 2-3 years and no one in their right mind would want to increase investment, you know, to increase production in a country that has an uncertain labor regulation framework and an uncertain policy framework.

So it may look revolutionary to say, you know, all the workers' demands must be met. But it is actually dangerous for the country to go down that route.

MABUSE (voice-over): Government, industry and union officials are meeting to try to resolve the crisis. The Chamber of Mines says it cannot undermine current wage contracts by entering into new ones. But just like Lonmin, companies may end up under pressure to pay more for peaceful production.

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CURNOW: Nkepile Mabuse there.

Now is there a fragmentation of South Africa's labor union movement? What does that mean for South Africa? More after the break.

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CURNOW: This week's "Face Time" interview is with Nerine Kahn. She heads up South Africa's Commission for Conciliation, Mediation and Arbitration, and she was a key player in helping to draft a wage agreement between mine owners and workers after the Lonmin mine killings.

Well, we asked her just how much that agreement in particular has changed South Africa's labor relations.

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CURNOW: Now the implications of the deal that was structure at Lonmin are still being felt and will continue to be felt in South Africa, I think, for a long time.

It was perceived as perhaps the company's caving in to an illegal strike.

NERINE KAHN, DIRECTOR, CCMA: It certainly could have been perceived as that. I think that you must look at the situation and desperate times sometimes call for important and extraordinary measures. And I think that the management at Lonmin had been through a very hard time. And they were being significantly criticized. And they wanted to find a solution.

And it's important that all the trade unions were present in the room the whole time that the negotiation happened. And they all agreed and supported the process that was happening, knowing the implications.

CURNOW: Key about that negotiation, that deal, particularly, is that it's now set a precedent. And there's now a wave of strikes, mostly in the resource sector here, illegal strikes, violence perhaps, with workers thinking they can get the same deal. And it, in a way, has shifted the entire labor relations landscape, hasn't it?

KAHN: It certainly has shifted South African labor relations landscape. But I think that the situation in Lonmin post-Marikana was very, very different to the situation of many of the other mines are finding themselves on, and it's important to note that, yes, it did create expectations.

But one has to see where those expectations came from and understand that you've seen a lot of socioeconomic protests coming out in a workplace dispute. The best analogy I can give you is that workers in Lonmin say to us, we need this money to be able to send our children to school because we have to pay taxis; we haven't had infrastructure (inaudible). And there were concerns around that.

So it wasn't really a labor dispute, but it was manifesting itself as a demand for wages to try and ensure that you can pay for services that you were expecting to be delivered to you.

CURNOW: So in many ways, this is an indication, perhaps, of the failure of government to do what is expected. And this is why this has become such an emotional and complicated issue. It's about inequality, poverty, expectations, as you say. It's a political issue.

KAHN: Well, it is a political issue, but it's not only the failure of government. And one must be careful just to only say that. It might be in some areas a failure of government, but it's also a failure of the employers to maybe stick with their mining charters, the social plans that have been developed, as well as other trade unions.

CURNOW: What are we dealing with here? Is this -- is this a tipping point in South Africa's history? (Inaudible) crossroads?

KAHN: I would argue --

CURNOW: Are we at a cross road?

KAHN: -- I think that we are there to try and determine what is the situation in relation to industrial relations, that there has been a neglect of how collective bargaining has been conducted, and that it is -- the protests that we're seeing and the unprotected strikes that we're seeing relate to a deep dissatisfaction that hasn't been conveyed properly and we're starting to see it coming out more and more.

CURNOW: For many people watching this, there's this slight sense of deja vu. We've seen this kind of thing before in the 1980s.

KAHN: Certainly. I mean, I think what brought about social change in South Africa was (inaudible) trade union movement (inaudible) some progressive employers were able to actually bring about protests and they've brought about social change. And I think we've gone through the gambit now of -- and we've had peaceful protests in South Africa.

We've seen frustration and we've seen social protest as against government. And now what I think is happening is we are seeing workers and citizens (inaudible) the employer again and asking them, help us to get delivery on issues that we're not seeing. And I think that that's quite a significant point that we need to note.

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CURNOW: Thanks there to Nerine Kahn.

Well, that's all from us this week. I'm Robyn Curnow. Please remember we're always online at CNN.com/MarketplaceAfrica. See you again soon.

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